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Jumbo Refinance Home loans Can Be Approved If you are Prepared
You are considering a jumbo loan for a home refinance while rates are low but you have been told, "Do not to waste your time applying. Not now, because the banks aren't lending!" Most banks aren't too keen on approving jumbo loans. The jumbo loans are thought high risk loan, especially in a stagnant economy. Some banks may offer jumbo loans but their underwriting process is so strict that getting the jumbo loan to the closing table doesn't seem possible. There are a few banks that handle jumbo loan efficiently and can hold these loans in their portfolio. Finding this kind of bank may be the first step in your quest to have your jumbo loan refinanced. The right bank may have the widest variety of terms and have the most flexible underwriting guidelines. There are other points that should be considered when choosing the right bank.
Despite the inherent risks resulting from higher loan amounts, the fundamentals of mortgage loan underwriting still apply. Like home loans with amounts below $417,000, the five Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what's different with jumbo loan underwriting?
A residential jumbo loan is any mortgage loan in which the loan size exceeds GSE's (Government Sponsored Enterprise such as Fannie Mae and Freddie Mac) limits. Currently, the GSE's loan limits are capped at $417,000.00 or $625,500 in Alaska or Hawaii. Any home loan exceeding these limits is considered a jumbo loan. This is obviously the first obvious distinction between a standard mortgage and also the jumbo loan. With higher loans comes a lesser LTV (loan to value) Expect to have at least a 20% equity position on a rate/term refinance.
The loan terms will vary between various lenders and it's always prudent to consider a lender that has a number of options that may be targeted at your specific needs, whether you'll need a Thirty year fixed interest rate, a 15 year fixed rate or perhaps a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The eye rates on these higher loans are not up to some borrowers think they would be. They often are a tiny bit greater than conventional mortgage rates and perhaps they might be less than some conventional loans after their rate adjustments.
Many borrowers have unique situations and the bank that you ought to use is a which has a clear knowledge of the uniqueness of the higher loan borrower. For instance, although a lot of borrowers possess a standard salary and W2 income, there are a disproportionate number when compared to lower loan amount applicants that have a W2 income which include bonuses or commissions. Using the higher loan values, there are also a bigger number of self employed borrowers and professionals. Different calculations should be employed for this type of borrower to allow for depreciation, depletion, bonuses and commissions. For any borrower's best shot at loan approval and efficiency, the higher loan amounts need a bank that has a staff of underwriters and originators who have a higher set of skills and training with this type of loan origination and underwriting.
In order to be approved for any jumbo loan, you must be prepared with support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you will need two years tax statements with all schedules, one month's most recent pay stubs, 8 weeks newest bank statements, schedule of property owned, newest statements of stocks, bonds 401k and IRA accounts. An expert loan originator who is familiar with this type of loan provides you with insight on what documents you'll need for the application.
